I

Indonesia expects commitment on infrastructure at G20

Sunday, 27 June 2010

ANTARA News

Indonesia, which needs over Rp2,000 trillion to build its infrastructure and to achieve an economic growth of about 6-7 percent in the next five years, expects investment commitments from bilateral countries taking part in the current G20 summit in Toronto, Canada.

The Indonesian government hopes that about 70 percent of infrastructure development in the next five years to boost domestic economic activities would be financed and carried out by the private sector.

Therefore, according to President Susilo Bambang Yudhoyono, the Indonesian government would continue to encourage infrastructure development cooperation with private parties.

Speaking on board the Garuda Indonesia presidential aircraft flying him to Toronto on Friday, the president said infrastructure development could not be the government`s responsibility only because it did not have enough funds.

"The government needs private sector involvement in infrastructure development at home. If necessary, foreign investors will be invited to take part because our infrastructure sector is of high value," President Yudhoyono said.

Based on an estimate of the Indonesian Chamber of Commerce and Industry (Kadin), Indonesia will need Rp2,855 - Rp2,910 trillion to finance its infrastructure development in the 2010 - 2014 period.

Paskah Suzetta, then minister of national development planning/head of Bappenas, once said that the government will stimulate investment in infrastructure development in order to boost economic growth to about 6-7 percent by 2014.

"We hope for a total investment of Rp2,000 trillion while actually we will have an investment of about Rp1,600 trillion in the next five years in order to achieve this growth," he said.

Owing to the big investment needed to develop infrastructure, the government has to promote its infrastructure development to the private sector as it could only finance 30 percent of the total funds needed for the projects.

About 70 percent of the infrastructure projects are expected to be financed by private companies, among others through a private public placement (PPP) scheme.

According to President Yudhoyono, the infrastructure sector has an important position to step up national economy through among others transportation facility, agriculture sector, and services.

"We will continue to increase infrastructure budget because in many countries, infrastructure development is the unification of public and private partnership," the president on said on his way to Toronto.

The president among other hoped that cooperation between China and Indonesia could be further expanded in various sectors to bring more benefits to both countries.

"As we know, the cooperation and relations between Indonesia and the People`s Republic of China have been very good and continued to develop. We hope the strategic partnership as well as cooperation and friendship will grow further," he said at a meeting with Chinese President Hu Jintao at Hotel Intercontinental in Toronto on Saturday morning.

He said the two countries had a very good history of relationship and he hoped with the meeting held on the sidelines of the G20 Summit the relations would continue to improve.

"China is an important partner and a good friend of Indonesia. We hope the cooperation would continue. I wish to hear anything we can do (for cooperation) in the future," he said.

In their later meeting Saturday evening China agreed to increase its investment on infrastructure so that by the end of 2014, its investment in Indonesia would reach US$50 billion.

According to Chief Economic Minister Hatta Rajasa, Chinese President Hu Jintao and President Susilo Bambang Yudhoyono discussed the matter in their meeting on the sidelines of the G20 summit which is being held in Toronto on June 26 and 27.

The minister said that the talks between Yudhoyono and Hu were very productive and that the two sides agreed to continue increasing both countries` economic relations.

China will continue to increase its investment in the infrastructure and trade sectors so that by 2014 it is expected to reach US$50 billion, Hatta Rajasa said.

Deputy Public Works Minister Hermanto Dardak said recently in Jakarta that four infrastructure projects funded with loans from China were likely be carried out fully by
Chinese contractors.

"That is what the Chinese ambassador has said. The packages will be one hundred percent carried out by Chinese contractors. We are now still trying to ask for the involvement of local contractors in the projects," he said.

He said his office would continue to negotiate so that local contractors could be involved in the projects.

"In reality and based upon experience it was possible like in the construction of the Surabaya-Madura bridge which was also funded with loans from China. Indeed China controls up to 60 percent of the project with the rest going to local contractors," he said.

He said the four infrastructure projects to be carried out by Chinese contractors are the 25-kilometer long Medan-Kualanamu toll road project in North Sumatra worth US$150 million in investment, the Cileunyi-Sumedang-Dawuhan toll road project in West Java with part of its funding to come from national and regional budgets and the Tayan bridge in West Kalimantan and the Kendari Bay bridge in Southeast Sulawesi.